B&G Foods, Inc. (NYSE: BGS, BGF), a manufacturer and
distributor of high-quality, shelf-stable foods, today announced
financial results for the fourteen and fifty-three weeks ended
January 3, 2009.
Financial Results for the Fourth Quarter of 2008
Net sales for the fourteen weeks ended January 3, 2009 (fourth
quarter of 2008) increased 1.9% to $134.9 million from $132.4
million for the thirteen weeks ended December 29, 2007 (fourth
quarter of 2007). Net sales during the fourth quarter and full year
2008 were negatively impacted by the poor maple syrup crop in
Canada that led to a global shortfall of maple syrup. Excluding net
sales of Maple Grove Farms pure maple syrup products, net sales for
the fourth quarter of 2008 increased $5.2 million or 4.2%. This
$5.2 million increase was attributable to sales price increases of
$7.1 million, partially offset by the negative impact of a change
in the mix of products sold of $1.9 million. Net sales of Maple
Grove Farms pure maple syrup products decreased by $2.7 million,
consisting of a unit volume decline of $4.6 million, partially
offset by sales price increases of $1.9 million.
Gross profit for the fourth quarter of 2008 decreased 12.7% to
$34.7 million from $39.7 million in the fourth quarter of 2007.
Gross profit expressed as a percentage of net sales decreased 4.3
percentage points to 25.7% for the fourth quarter of 2008 from
30.0% in the fourth quarter of 2007. The decrease in gross profit
was primarily due to increased costs of maple syrup, packaging,
wheat, transportation, beans, corn and sweeteners, partially offset
by $9.0 million in sales price increases. Operating income
decreased 6.6% to $19.4 million for the fourth quarter of 2008,
from $20.7 million in the fourth quarter of 2007.
Excluding the impact of items affecting comparability, the
Company�s net income for the fourth quarter of 2008 was $4.1
million, and earnings per share was $0.11, as compared to net
income of $5.2 million, or $0.14 per share, for the fourth quarter
of 2007. Please see the table below for information concerning
items affecting comparability of net income and earnings per share.
Including items affecting comparability, the Company experienced a
net loss of $1.1 million, or $0.03 per share, for the fourth
quarter of 2008.
Excluding the impact of severance and termination charges
resulting from a workforce reduction, the Company�s fourth quarter
2008 EBITDA of $24.3 million was flat as compared to prior year, in
line with previous guidance. Including the impact of severance and
termination charges, fourth quarter 2008 EBITDA decreased 3.4% to
$23.5 million as compared to fourth quarter 2007 EBITDA of $24.3
million.
David L. Wenner, Chief Executive Officer of B&G Foods,
stated, �We are very pleased to announce a fourth quarter EBITDA
that matches our prior year fourth quarter, after allowing for
severance and termination charges. This result is in line with the
guidance we provided in our third quarter conference call and was
achieved despite a less than favorable sales mix and several major
customer inventory reduction initiatives at the end of the quarter.
While cost remained challenging in the quarter, our pricing
strengthened and our cost reduction efforts gained momentum,
offsetting to a great degree the cost increases we experienced. We
expect pricing and cost reduction momentum to continue into 2009,
cost increases to ease and our net sales to remain solid, setting
the stage for meaningful margin improvement and improved EBITDA
results in the current year.�
Financial Results for Fiscal 2008
Net sales for the fifty-three weeks ended January 3, 2009
(fiscal 2008) increased 3.3% to $486.9 million from $471.3 million
for the fifty-two weeks ended December 29, 2007 (fiscal 2007).
Excluding net sales of Maple Grove Farms pure maple syrup products
and the impact of the termination of a temporary co-packing
arrangement, net sales for fiscal 2008 increased $18.9 million, or
4.3%. Of this $18.9 million increase, $8.6 million was attributable
to sales price increases, $1.3 million was attributable to an
increase in unit volume and $9.0 was attributable to an extra two
months of Cream of Wheat sales. Net sales of our Maple Grove Farms
pure maple syrup products decreased by $2.5 million, consisting of
a unit volume decline of $8.2 million, partially offset by sales
price increases of $5.7 million. Net sales in fiscal 2008 were also
negatively impacted by $0.8 million due to the termination of a
temporary co-packing arrangement.
Gross profit for fiscal 2008 decreased 9.5% to $133.9 million
from $148.0 million in fiscal 2007. Gross profit expressed as a
percentage of net sales decreased 3.9 percentage points to 27.5% in
fiscal 2008 from 31.4% in fiscal 2007. The decrease in gross profit
was primarily due to the increased costs of maple syrup, packaging,
wheat, transportation, beans, corn and sweeteners, partially offset
by $14.3 million in sales price increases. Operating income
decreased 9.0% to $73.9 million during fiscal 2008, compared to
$81.2 million in the comparable period of fiscal 2007.
Excluding the impact of items affecting comparability, the
Company�s net income for fiscal 2008 was $14.0 million, and
earnings per share was $0.38. Please see the table below for
information concerning items affecting comparability of net income
and earnings per share. Including items affecting comparability,
the Company�s net income for fiscal 2008 was $9.7 million, or $0.27
per share. During a portion of fiscal 2007, B&G Foods had two
classes of common stock outstanding, and computed earnings per
share under the two class method. As a result, even after taking
into account items affecting comparability, it is not meaningful to
compare earnings per share data for fiscal 2008 to fiscal 2007.
Excluding the impact of severance and termination charges,
fiscal 2008 EBITDA was $90.3 million, a decrease of 4.4% as
compared to fiscal 2007 EBITDA of $94.5 million. Including the
impact of severance and termination charges, fiscal 2008 EBITDA was
$89.4 million, a decrease of 5.3%.
Items Affecting Comparability�Comparison of Adjusted
Information to GAAP Information
The company uses �net income, as adjusted� and �earnings per
share, as adjusted,� which are calculated as reported net income
and earnings per share adjusted for items that affect
comparability. These non-GAAP financial measures reflect
adjustments to reported net income and earnings per share to
eliminate the net expense related to items identified in the table
below. This information is provided in order to allow investors to
make meaningful comparisons of the Company�s operating performance
between periods and to view the Company�s business from the same
perspective as the Company�s management. Because the Company cannot
predict the timing and amount of charges associated with reductions
in workforce and unrealized gains or losses on the Company�s
interest rate swap, management does not consider these costs when
evaluating the Company's performance, when making decisions
regarding the allocation of resources, in determining incentive
compensation for management, or in determining earnings
estimates.
�
Fourth Quarter �
Fiscal Year 2008 �
2007 2008 �
2007 (in thousands) Net (loss)
income, as reported $ (1,096 ) $ 5,168 $ 9,733 $ 17,825
Mark-to-market adjustment on interest rate swap, net of tax((1))
4,659 � 3,765 � Severance and termination charges, net of tax � 519
� � � 519 � � Net income, as adjusted $ 4,082 � $ 5,168 $ 14,017 $
17,825 �
Fourth Quarter Fiscal Year 2008 �
2007 2008 (in thousands) EPS-Class A common stock, as
reported $ (0.03 ) $ 0.14 $ 0.27 Mark-to-market adjustment on
interest rate swap, net of tax((1)) 0.13 � 0.10 Severance and
termination charges, net of tax 0.01 � � � � 0.01 EPS-Class A
common stock, as adjusted $ 0.11 � $ 0.14 $ 0.38
_____________________
(1) � The counterparty of our interest rate swap is an affiliate of
Lehman Brothers. Following the bankruptcy of Lehman Brothers, we
determined that the interest rate swap was no longer an effective
hedge under the guidelines of SFAS No. 133. �Unrealized loss on
interest rate swap, net of tax� reflects a non-cash, non-operating
mark-to-market adjustment of the interest rate swap. The interest
rate adjustment will reverse over the remaining life of the
interest rate swap agreement as a non-cash, non-operating gain.
Guidance
As previously announced, EBITDA for fiscal 2009 is expected to
be approximately $95 to $98 million. Capital expenditures are
expected to be up to approximately $11 million.
�Fourth quarter 2008 and year-to-date 2009 results have been in
line with expectations and we expect that 2009 will be a year of
improved operating results in the business,� stated Mr. Wenner.
�While we expect that overall cost will continue to increase
modestly in 2009 � even net of distribution, energy and selected
commodity cost decreases � we also expect that price increases
already in place and cost reduction efforts will be sufficient to
return operating margins to more normal levels. Last week our Board
declared the Company�s 18th consecutive quarterly dividend,
expressing its continuing confidence in the financial health of the
Company and our ability to generate the cash flow necessary to
continue paying a generous dividend to our stockholders.�
Stock and Debt Repurchase Plan
As previously announced, during the fourth quarter of 2008, the
Company�s Board of Directors authorized a stock and debt repurchase
program for the repurchase of up to $10.0 million of the Company�s
Class A common stock and/or 8% senior notes over a twelve month
period. Under the authorization, the Company may purchase shares of
Class A common stock and/or senior notes from time to time in the
open market or in privately negotiated transactions in compliance
with the applicable rules and regulations of the Securities and
Exchange Commission.
During the fourth quarter of 2008, the Company repurchased and
retired 550,331 shares of Class A common stock at a weighted
average price of $4.60 per share.
The timing and amount of future repurchases, if any, will be at
the discretion of management, and will depend on available cash,
market conditions and other considerations. Therefore, there can be
no assurance as to the number of additional shares, if any, that
will be repurchased under the stock and debt repurchase program, or
the aggregate dollar amount of the shares or principal amount of
senior notes, if any, repurchased. The Company may discontinue the
program at any time. Any shares repurchased pursuant to the stock
repurchase program will be retired. Likewise, any senior notes
repurchased will be cancelled. The Company currently has 36,246,657
shares of Class A common stock outstanding, 18,528,521 of which
trade separately and 17,718,136 of which trade as part of EISs. The
Company currently has $240.0 million principal amount of senior
notes outstanding. In general, the Company�s credit agreement
prohibits the Company from repurchasing its 12% senior subordinated
notes.
Conference Call
B&G Foods will hold a webcast and conference call at 4:30
p.m. ET today, March 5, 2009. The call will be webcast live over
the Internet from the Investor Relations section of B&G Foods�
website at www.bgfoods.com under �Investor Relations�Company
Overview.� Participants should follow the instructions provided on
the website for the download and installation of audio applications
necessary to join the webcast. The call can also be accessed live
over the phone by dialing (888) 239-5348 or for international
callers by dialing (913) 312-1302.
A replay of the call will be available one hour after the call
and can be accessed by dialing (888) 203-1112 or (719) 457-0820 for
international callers. The password is 4847128. The replay will be
available from March 5, 2009 through March 12, 2009.
About Non-GAAP Financial Measures
�Net income, as adjusted,� �earnings per share, as adjusted� and
�EBITDA� (net income before net interest expense, income taxes,
depreciation and amortization) are �non-GAAP (Generally Accepted
Accounting Principles) financial measures.� A non-GAAP financial
measure is defined as a numerical measure of financial performance
that excludes or includes amounts so as to be different than the
most directly comparable measure calculated and presented in
accordance with GAAP in B&G Foods� consolidated balance sheets
and related consolidated statements of operations and cash
flows.
Non-GAAP financial measures should not be considered in
isolation or as a substitute for the most directly comparable GAAP
measures. Comparisons of net income, as adjusted and earnings per
share, as adjusted to GAAP information is set forth above. A
reconciliation of EBITDA with net income and net cash provided by
operating activities is included below for the fourth quarter and
fiscal 2008 and the fourth quarter and fiscal 2007, along with the
components of EBITDA.
About B&G Foods, Inc.
B&G Foods and its subsidiaries manufacture, sell and
distribute a diversified portfolio of high-quality, shelf-stable
foods across the United States, Canada and Puerto Rico. B&G
Foods� products include hot cereals, fruit spreads, canned meats
and beans, spices, seasonings, marinades, hot sauces, wine vinegar,
maple syrup, molasses, salad dressings, Mexican-style sauces, taco
shells and kits, salsas, pickles, peppers and other specialty food
products. B&G Foods competes in the retail grocery, food
service, specialty, private label, club and mass merchandiser
channels of distribution. Based in Parsippany, New Jersey, B&G
Foods� products are marketed under many recognized brands,
including Ac�cent, B&G,�B&M, Brer Rabbit, Cream of Rice,
Cream of Wheat, Emeril�s, Grandma�s Molasses, Joan of Arc, Las
Palmas, Maple�Grove�Farms�of�Vermont, Ortega, Polaner, Red Devil,
Regina, Sa-s�n, Trappey�s, Underwood, Vermont Maid and
Wright�s.
Forward-Looking Statements
Statements in this press release that are not statements of
historical or current fact constitute �forward-looking statements.�
The forward-looking statements contained in this press release
include, without limitation, statements related to our expectations
regarding costs, cost reduction efforts and pricing for fiscal
2009; our expectations regarding operating margin improvements; and
our expectations regarding EBITDA for fiscal 2009. Such
forward-looking statements involve known and unknown risks,
uncertainties and other unknown factors that could cause the actual
results of B&G Foods to be materially different from the
historical results or from any future results expressed or implied
by such forward-looking statements. In addition to statements that
explicitly describe such risks and uncertainties readers are urged
to consider statements labeled with the terms �believes,� �belief,�
�expects,� �projects,� �intends,� �anticipates� or �plans� to be
uncertain and forward-looking. The forward-looking statements
contained herein are also subject generally to other risks and
uncertainties that are described from time to time in B&G
Foods� filings with the Securities and Exchange Commission,
including under Item 1A, �Risk Factors� in our Annual Report on
Form 10-K for fiscal 2008 filed on March 5, 2009. We undertake no
obligation to publicly update or revise any forward-looking
statement, whether as a result of new information, future events or
otherwise.
�
B&G Foods, Inc. and
Subsidiaries
Consolidated Balance
Sheets
(Dollars in thousands, except
per share data)
(Unaudited)
� �
January 3,2009
December 29,2007 Assets Current assets: Cash
and cash equivalents $ 32,559 $ 36,606 Trade accounts receivable,
less allowance for doubtful accounts and discounts of $745 in 2008
and 2007 36,578 42,362 Inventories 88,899 93,181 Prepaid expenses
2,475 3,556 Income tax receivable 2,221 569 Deferred income taxes
1,110 648 Total current assets 163,842 176,922 � Property, plant
and equipment, net 51,059 49,658 Goodwill 253,353 253,353
Trademarks 227,220 227,220 Customer relationship intangibles, net
116,318 122,768 Net deferred debt issuance costs and other assets
13,298 17,669 Total assets $ 825,090 $ 847,590 �
Liabilities and
Stockholders� Equity � Current liabilities: Trade accounts
payable 27,286 32,126 Accrued expenses 16,023 21,894 Dividends
payable 6,162 7,797 Total current liabilities 49,471 61,817 �
Long-term debt 535,800 535,800 Other liabilities 23,671 6,376
Deferred income taxes 71,500 68,962 Total liabilities 680,442
672,955 � Stockholders� equity: Preferred stock, $0.01 par value
per share. Authorized 1,000,000 shares; no shares issued or
outstanding � � Class A common stock, $0.01 par value per share.
Authorized 100,000,000 shares; 36,246,657 and 36,778,988 shares
issued and outstanding as of January 3, 2009 and December 29, 2007
362 368 Class B common stock, $0.01 par value per share. Authorized
25,000,000 shares; no shares issued or outstanding as of January 3,
2009 and December 29, 2007 � � Additional paid-in capital 171,123
202,197 Accumulated other comprehensive loss (12,358) (3,718)
Accumulated deficit (14,479) (24,212) Total stockholders� equity
144,648 174,635 Total liabilities and stockholders� equity $
825,090 $ 847,590 � �
B&G Foods, Inc. and
Subsidiaries
Consolidated Statements of
Operations
(Dollars in thousands, except
per share data)
(Unaudited)
� �
Fourth Quarter Ended Year Ended
January 3,
2009
�
December 29,
2007
January 3,
2009
�
December 29,
2007
� Net sales $ 134,855 $ 132,384 $ 486,896 $ 471,336 Cost of goods
sold � 100,151 � � 92,648 � 352,967 � 323,316 � � Gross profit
34,704 39,736 133,929 148,020 � Operating expenses: Sales,
marketing and distribution expenses 10,325 14,500 44,888 51,684
General and administrative expenses 3,400 2,880 8,707 9,682
Amortization expense�customer relationships � 1,612 � � 1,613 �
6,450 � 5,501 � Operating income 19,367 20,743 73,884 81,153 �
Other expenses: Interest expense, net � 21,026 � � 12,660 � 58,067
� 52,688 � Income before income tax expense (1,659 ) 8,083 15,817
28,465 Income tax expense � (563 ) � 2,915 � 6,084 � 10,640 � Net
income $ (1,096 ) $ 5,168 � 9,733 � 17,825 � � Earnings per share
calculations: Basic and diluted distributed earnings per share:
Class A common stock $ 0.17 $ 0.21 $ 0.81 $
0.92
(1)
Basic and diluted earnings (loss) per share: Class A common stock $
(0.03 ) $ 0.14 $ 0.27 $ 0.62 Class B common stock $ � $ � $ � $
(0.30 ) � (1) �
�Distributed earnings� differs
from actual per share amounts paid as dividends as the earnings per
share computation under GAAP requires the use of the weighted
average rather than the actual number of shares outstanding.
�
B&G Foods, Inc. and
Subsidiaries
Reconciliation of EBITDA to Net
Income and to Net Cash Provided by Operating Activities
(Dollars in thousands)
(Unaudited)
� �
Fourth Quarter Ended Year Ended
January 3,
2009
�
December 29,
2007
January 3,
2009
�
December 29,
2007
� Net income $ (1,096 ) $ 5,168 $ 9,733 $ 17,825 Income taxes (563
) 2,915 6,084 10,640 Interest expense, net 21,026 12,660 58,067
52,688 Depreciation and amortization � 4,132 � � 3,592 � � 15,552 �
� 13,298 � EBITDA(1) 23,499 24,335 89,436 94,451 Income taxes 563
(2,915 ) (6,084 ) (10,640 ) Interest expense, net (21,026 ) (12,660
) (58,067 ) (52,688 ) Deferred income taxes 1,163 2,379 7,250 9,323
Amortization of deferred debt issuance costs 793 793 3,169 3,190
Unrealized loss on interest rate swap 7,083 � 5,569 �
Reclassification to interest expense, net 418 � 494 � Share-based
compensation expense 522 � 1,032 � Write off of deferred debt
issuance costs � � � 1,769 Changes in assets and liabilities, net
of effects of business combination � (1,045 ) � 917 � � (2,303 ) �
(11,356 ) Net cash provided by operating activities $ 11,970 � $
12,849 � $ 40,496 � $ 34,049 � � � (1) � EBITDA is a measure used
by management to measure operating performance. EBITDA is defined
as net income before net interest expense, income taxes,
depreciation, and amortization. Management believes that it is
useful to eliminate net interest expense, income taxes,
depreciation and amortization because it allows management to focus
on what it deems to be a more reliable indicator of ongoing
operating performance and our ability to generate cash flow from
operations. We use EBITDA in our business operations, among other
things, to evaluate our operating performance, develop budgets and
measure our performance against those budgets, determine employee
bonuses and evaluate our cash flows in terms of cash needs. We also
present EBITDA because we believe it is a useful indicator of our
historical debt capacity and ability to service debt and because
covenants in our credit facility and the indentures governing the
senior notes and the senior subordinated notes contain ratios based
on these measures. As a result, internal management reports used
during monthly operating reviews feature the EBITDA metric.
However, management uses this metric in conjunction with
traditional GAAP operating performance and liquidity measures as
part of its overall assessment of company performance and liquidity
and therefore does not place undue reliance on this measure as its
only measure of operating performance and liquidity. � EBITDA is
not a recognized term under GAAP and does not purport to be an
alternative to operating income or net income as an indicator of
operating performance or any other GAAP measure. EBITDA is not a
complete net cash flow measure because EBITDA is a measure of
liquidity that does not include reductions for cash payments for an
entity�s obligation to service its debt, fund its working capital,
capital expenditures and acquisitions, if any, and pay its income
taxes and dividends, if any. Rather, EBITDA is a potential
indicator of an entity�s ability to fund these cash requirements.
EBITDA also is not a complete measure of an entity�s profitability
because it does not include costs and expenses for depreciation and
amortization, interest and related expenses and income taxes.
Because not all companies use identical calculations, this
presentation of EBITDA may not be comparable to other similarly
titled measures of other companies. However, EBITDA can still be
useful in evaluating our performance against our peer companies
because management believes this measure provides users with
valuable insight into key components of GAAP amounts.
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